Singapore Airlines: No Merger With Qantas Until Australia Opens U.S. Route to Competition

Singapore Airlines on Friday dismissed talk of a potential merger with Qantas, saying the issue could only be considered if the Australian government allows greater competition on the prized trans-Pacific route to the United States.

On Thursday, Australian Prime Minister John Howard threw his weight behind the idea of a merger between two of Asia's biggest - and most profitable - airlines after a meeting with counterpart Lee Hsien Loong on the sidelines of the Asia-Pacific Economic Cooperation summit in South Korea.

"This issue has already been discussed and debated extensively in recent months," Singapore Airlines spokesman Stephen Forshaw said. "We've said all along that for mergers to happen, there needs to be considerable regulatory liberalization. It is an idea ahead of its time."

Canberra is considering whether Singapore Airlines Ltd. should be granted the right to pick up passengers in either Melbourne or Sydney for travel onward to Los Angeles.

Currently, the Sydney-Los Angeles route is flown only by Qantas and UAL Corp.'s United Airlines. Qantas Airways Ltd. controls 75 percent of the market share on the Australia-U.S. route, from which it derives around 15 percent of its net profit.

"Qantas and Singapore Airlines are competitors and that means consumers win from having choice. We think there are more opportunities to compete, for example on the Australia-U.S.A. route," Forshaw said.

Howard and Lee discussed the merger issue in the broader context of the current open skies pact between the nations, who are free trade partners.

Australia's ongoing aviation policy review, due by the end of the year, includes a possible easing of foreign ownership restrictions on Qantas and whether the carrier might eventually merge with Singapore Airlines, majority owned by the government's investment arm, Temasek Holdings Pte. Ltd.

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